Suppliers unprepared for climate change

NEW YORK:A new report from Accenture and the Carbon Disclosure Project (CDP) says suppliers in the U.S. Brazil, China and India are the least prepared to insure their supply chains against climate risk. Suppliers in France, the UK, Spain and Germany are identified as the most sustainable.

The research, which also incorporates information from the U.N. World Risk Report, is based on data from 3,396 companies – a 40 percent increase in the past three years – requested by 66 multinationals (including Nissan right and Unilever) that spend an annual US$1.3 trillion on procurement.

"What is concerning is that, despite the increase in the number of companies assessing and reporting on their emissions, the data suggests that suppliers are making either marginal or no improvements in their development of sustainable supply chains capable of weathering climate risks and other natural disasters," said Gary Hanifan, managing director, Accenture Strategy.

Key findings indicate supply chains in the US, China and Italy are considered "vulnerable"; suppliers in India and Canada are not doing enough to manage climate change risks; and Brazilian suppliers have done the least to manage their exposure to climate change. Among European countries, which have traditionally been relatively proactive on climate risk, "Italy is lagging the pack, and its suppliers show limited openness to cooperation," says the report.

The CDP notes, however, that while Indian suppliers are reluctant to report their activity they "demonstrate a high propensity to collaborate with supply chain partners to reduce climate risk and, where they do invest in emission reduction initiatives, they deliver the greatest return on investment".

Report co-author Accenture says that despite the growing threat of climate change, the global corporate response is falling short of what is needed: "All the key metrics tracked in this year's supply chain program are either stagnant or only marginally improving. Uncertain regulatory environments, volatile energy prices and economic challenge all continue to create headwinds."

The CDP works with 767 institutional investors with assets of US$92 trillion to motivate companies to take action to reduce their environmental impact.